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| Credit risk biggest concern for tech cos: survey |
| Press Trust of India / New Delhi Nov 13, 2009, 21:45 IST |
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With the global financial crisis underlining the importance of risk management for healthy businesses, a study says that credit risk is one of the biggest concerns for most companies in the developed markets especially in the technology sector.
The Risk Management Study, conducted in Europe by insurance broking firm Marsh India, is important for Indian IT and IT-enabled companies as nearly 80 per cent of their businesses come from these markets along with the US.
The study states that risk management has become an important aspect since the past one year, primarily among the communication, media and technology (CMT)companies.
"We think it is important to unveil the study in the country and mainly to the IT & ITeS companies as nearly 80 per cent of their businesses come from the US and European markets. It is critical that our technology firms understand the risks they face in such markets and the changing attitude towards managing risks," Marsh India Country Head and CEO Sanjay Kedia said releasing the report here today.
The study states that over the next 18 months, credit risk will be one of the biggest causes of concern followed by business continuity risk and contractual performance risk, with 66 per cent of the respondents stating credit risk as the primary cause for worry.
Credit risk refers to the potential that a bank borrower or counter-party would fail to meet its obligations in accordance with agreed terms.
Moreover, 85 per cent of the respondents feel that risk has moved from being a mere Chief Financial Officer's entry to a boardroom discussion.
On the risk management budget for the next year, nearly 36 per cent of the respondents expect it to go up, while 55 per cent say it would remain stagnant and 6 per cent expect it to come down, the survey said.
"We have surveyed over 100 risk management decision makers among the CMT sector and the result is one of the most comprehensive risk management studies ever conducted in this field. The broad consensus emerging from talking to domestic technology companies is that these issues are equally pertinent in the domestic context as well," Kedia added.
The report also highlights hidden risks such as errors and omissions (E&O) and directors' and officers' liability (D&O) that are critical to the technology sector.
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